Developers Face Uphill Battle in Onshore Debt Restructuring

Chinese property developers, grappling with a liquidity crisis since 2021, are now turning their focus to restructuring onshore bonds in 2025. This shift comes as the prolonged weakness in housing demand and the broader economy makes it increasingly unviable to extend maturities as they have done in the past.

Key Players in the Restructuring Effort

Logan Group, a Shenzhen-based real estate firm, plans to restructure all of its onshore bonds in 2025. The company, facing repayments of 2.4 billion yuan ($330 million) next year, aims to start discussions with bondholders in January and gain approval in March. Similarly, Shanghai-based CIFI Holdings, due to repay bondholders 3.1 billion yuan in 2025, is also considering a debt revamp, though its progress will likely depend on the success of Sunac's landmark restructuring deal.

Sector-Wide Challenges and Outlook

Despite a range of measures by authorities to bolster the sector, including cutting mortgage rates and minimum down-payment ratios, the fundamentals for most developers have not significantly improved in the past three years. "There's no new liquidity and no new lending and sales haven't improved," said Glen Ho, national turnaround & restructuring leader at Deloitte. "The focus for 2025 will be onshore debt restructuring," he added.